When do furloughs turn into layoffs?
The number of jobs lost since the start of the pandemic hit 39 million this week, said Eric Morath at The Wall Street Journal, and economists and policymakers are asking how many will come back. A month ago, 88 percent of workers who lost their jobs "called their absences temporary" believing they would be "returning to the same job within six months." But that may be wishful thinking. While some businesses reopen, "restaurants and other small businesses are closing up shop for good," and several national retailers have declared bankruptcy. "Permanent layoffs are more likely at factories as consumer spending declines," and hospitality businesses such as MGM Resorts have darkened their outlook on rehiring furloughed employees. In a survey of 64 economists, most forecast that the jobless rate would remain in the double digits until 2021.
Many industries that are "already under pressure from digital competition will have trouble coming back," said Noah Smith at Bloomberg. Airlines, too, could face permanent disruption if teleworking cuts into business travel, and higher education will never be the same. A recent paper out of the University of Chicago estimates that 40 percent of jobs lost are gone for good, said Samantha Fields and Mitchell Hartman at NPR's Marketplace. Businesses that were sanguine a month ago now foresee a "cataclysmic" recession. "Looking through history at previous recessions," said Stanford economist Nicholas Bloom, one of the co-authors of the paper, "often these temporary layoffs unfortunately turn out to be permanent."
For a few forward-thinking companies, recessions can create "unprecedented opportunities for hiring," said Claudio Fernández-Aráoz at the Harvard Business Review. Mass layoffs and receding globalization have created a "pool of available talent" that could lay "the groundwork for post-crisis recovery and growth — if visionary leaders can make the most of it." During the 1945 recession, Hewlett-Packard hired "legions of great engineers streaming out of closing or soon-to-close U.S. military labs" — a decision that turned out to be pivotal to the company's later success.
A fight "over whether to boost benefits for Americans who lose their jobs" has turned into a major hurdle for a new coronavirus bill, said Alexander Bolton at The Hill. Most Republicans believe that expanded unemployment benefits, including a $600-per-week federal supplement that expires July 31, keep workers at home. Democrats want the supplement extended. One potential compromise: Sen. Rob Portman (R.-Ohio) has proposed letting laid-off workers "continue collecting $450 of the $600 weekly benefit if they find work in the next nine weeks." Senate Majority Leader Mitch McConnell (R.-Ky.), and President Trump, though, have much harsher incentives in mind, said Will Wilkinson at The New York Times. The GOP knows workers are reluctant to come back and risk getting sick. But if McConnell has his way, "they'll get kicked off unemployment if they don't." The GOP plan seems to be to"coerce Americans back to work by refusing desperately needed help" — whether or not there are any jobs to be had.